Finding good penny stocks is like finding a needle in the haystack. Why? It's simply because penny stocks are a dangerous commodity. With the so low prices, even a very small fluctuation in their price can either double your investments or cut them in half. Penny stocks are among the most volatile and variable investments in the stocks exchange. Companies listed usually have not history of stable or solid fiscal performance. You have to know that low-priced stocks can also be manipulated by some stockholders for their own benefits. Thus, you should know the risk level before you decide on trading in penny stocks.
If you want to find good penny stocks, you must first research on the penny stocks' background. Gather a list of available penny stocks and eliminate those that indicate poor performance. It is also a good investment idea to not trade on penny stocks not included in major stock exchanges in the US. Also, choose companies with $10 million and above in their yearly cash. You should also only consider penny stocks of companies whose industries are familiar to you.
The next thing to do is to decide on your investment. Go for firms that consistently make cash. Firms that show increased or improved free cash flow over several periods are good penny stocks. Choose the over those firms that show high debts that need to be returned. Compare the book worth per share against the price of stock instead of following the cost of stock share blindly.
When you've found the good penny stocks and are ready to invest, you need to open an account to trade. There are a lot of brokers you can find online, offering different services at low commission rate. Invest in different penny stocks to reduce your risks.
Limiting your penny stocks orders will allow you to avoid the big or huge changes in the prices of penny stocks during your order placement. Keep in mind that penny stocks are such a volatile commodity and the prices may have significant difference. Limiting your orders will help you manage this volatility well.
Below are the tips to finding good penny stocks to buy:
1. Get good penny stocks from the list of professionals. It's just a waste of time to research from the scratch. Professionals have already made their research on good penny stocks. All you need to do is to confirm the research you got.
2. Look out for good penny stocks that trade in big volumes because these stocks surely have a consistent high volume of shares; thus, they provide a good rate of return.
3. Good penny stocks should have an improved buying and selling history. These stocks should also increase in value even for a short time. As a matter of fact, good penny stocks can give you doubled investment overnight.
4. Consider microcap stock of companies with not so many competitors because they have the advantage of high demands compared to companies with high competition.
5. Look for in-demand companies.
6. Stocks of companies with any form of illegal or unethical behavior are not considered good penny stocks.
We strive to provide the best possible information on penny stock trading. If you want to find out more about penny stocks and get some penny stock tips, then visit our site on how and where to buy penny stocks.